Philadelphia Transfer Tax Update for 2023

You must be aware of the Philadelphia transfer tax if you're dealing with commercial, residential, or real estate development.

Post Updated: 8.8.2023

The state and the county impose a real estate transfer tax in Pennsylvania based on the property's location. So, you must familiarize yourself with Philadelphia's transfer tax to transfer property there. The buyer and seller typically split the tax burden and pay it after filing with the Record of Deeds Department.

You must pay that tax within 30 days of the transfer date. Otherwise, you'll incur additional charges. Equally important, if the Departments of Records or the Department of Revenue determines you attempt to bypass the tax, the tax assessment increases an extra 50% of the tax due.

Philadelphia's Transfer Tax is Among the Highest in Pennsylvania

The Commonwealth imposes a 1% transfer tax on the value of the real estate. However, Philadelphia imposes an additional 3.278% tax on the value of the deeded real estate for a combined rate of 4.278%. As a result, Philadelphia's real estate transfer tax is among the highest in Pennsylvania.

Montgomery County, Pennsylvania's transfer tax is only 1%. So, if you're looking to transfer property in the Philly area, you might want to start by talking with a real estate lawyer to ensure you're covered.

Percentage of Ownership Change Triggering the Transfer Tax

An ownership change of 75% or more triggers the transfer tax in Philadelphia. The county bases the tax on actual consideration paid, which includes any liens or encumbrances on the real estate.

It's important to note that the transfer tax applies not only to selling a property but also to changes in ownership in real estate by deed or other legal documents, including long-term leases.

You can get more details by visiting the City of Philadelphia's website.

Exemptions from the Philadelphia Real Estate Transfer Tax

Pennsylvania and Philadelphia provide exemptions from transfer taxes depending on the purpose and type of transaction and the parties involved.

However, the law may vary between Pennsylvania and the county. As a result, the Commonwealth may exclude some transactions from the transfer tax, while Philadelphia may not. So, it makes sense to talk with a real estate attorney familiar with the laws of each sector.

For instance, Pennsylvania's real estate transfer tax law excludes transfers between a stepparent and a step-child (including a step-child's spouse). But, on the other hand, Philadelphia's transfer tax doesn't.

Philadelphia transfer tax law excludes 28 transactions, while Pennsylvania transfer tax law excludes 34 transactions.

Common exclusions include:

  • transfers to an excluded party by gift or dedication
  • confirmation deeds
  • correctional deeds
  • transfers between certain relatives and specific nonprofits
  • transfers of co-op interest

However, such transactions must also meet specific requirements.

The Government is Excluded from Transfer Tax

Pennsylvania and Philadelphia, transfer tax laws exclude the federal, state, or local government or its agencies from tax for all transactions.

However, at times the party receiving the transfer may not be excluded, making them responsible for the transfer tax—for example, properties purchased at a sheriff's sale or from a state or local government agency.

Family Member Exclusions to the Tax

Pennsylvania and Philadelphia exclude tax transfer costs with transactions between certain family members, including:

  • Parent and child (including child's spouse)
  • Grandparent and grandchild (including the grandchild's spouse)
  • Siblings (including the sibling's spouse)
  • Husband and wife
  • Divorced spouses

None of these relationships include transfers between uncles/aunts, nieces/nephews, or cousins. In addition, although the tax transfer law excludes transfers between spouses, the transfer must be under a divorce decree.

Philadelphia explicitly excludes transfers between life partners that meet the requirements of a life partnership under the Philadelphia Code from real estate transfer tax.

However, while the Pennsylvania real estate transfer tax law does not explicitly list life partners, the law protects same-sex marriages under the definition of husband and wife.

Nonprofit Housing Exemptions from Transfer Tax

Philadelphia offers specific exemptions for transfers involving nonprofit housing corporations incorporated by the City to support affordable housing and nonprofits.

For example, Philadelphia excludes the imposition of real estate transfer tax on both parties when a party transfers to a nonprofit housing corporation, such as the Philadelphia Housing Authority.

In addition, the real estate transfer tax excludes transfers to and from nonprofit housing organizations that renovate properties and subsequently transfer the property to a person meeting specific income requirements.

However, the transfer cannot be to a for-profit entity or a person failing to qualify as having a low-to-moderate income.

These exclusions may be significant to real estate developers and nonprofit entities seeking to develop within Philadelphia.

Exemptions for Religious Organizations

Generally, the Philadelphia transfer tax excludes religious organizations and other nonprofit corporations. However, the exemption applies if the transferor has not used the property commercially.

Confirmation Deed Exclusions

Philadelphia and Pennsylvania, transfer tax laws exclude confirmation deeds. However, the deed must be made without consideration, previously recorded, and intended to confirm an ownership interest in a property.

A typical example includes a deed to confirm a party's ownership interest in a property held as a joint tenant with the right of survivorship with a party that has since deceased.

Similarly, Philadelphia and Pennsylvania laws exclude correctional deeds from real estate transfer tax if done solely to correct an error regarding the description of the parties or the property.

For tax exclusion, the corrective deed must:

  1. Convey the same property interest as in the original deed
  2. The parties must have treated the property interest expressed in the correctional deeds as that of the grantee
  3. The parties, at no time since the original act, treated the property interest described in the original deed as that of the grantee.

Talk to an Experienced Real Estate Attorney

It's essential to understand that transfer taxes exist in residential and commercial property transactions. So, you may need to consult a real estate attorney near you to protect your interests. In addition, High Swartz offers various legal services to help clients with almost any legal issue, from real estate and business law to estate planning and family law.

The information above is general: we recommend you consult an attorney regarding your circumstances. The content of this information should not be considered legal advice or a substitute for legal representation.

How do I Evict a Tenant?

If you’re a landlord, you might have faced this very real question: how do I evict a tenant? After all, it isn’t all that unusual to have an inconsiderate, messy, or possibly even dangerous tenant. So at some point, you may decide that it’s necessary to part ways and evict them from your property.

But here’s the catch. Evicting a tenant isn’t as easy as you might expect. For example, residential landlords are often surprised about the numerous requirements and the time it takes to evict. There’s also time and monetary costs to consider.

In Pennsylvania, the Landlord and Tenant Act governs the process. And strict compliance is vital to ensure that you evict a tenant legally. After reading this article, you may want to talk with a real estate attorney near you to cover all the bases. Our firm has years of experience assisting residential and commercial landlords in navigating their rights in Pennsylvania and the mid-Atlantic region.

Steps Required for Evicting Tenants

Although various jurisdictions may differ slightly, typically, the process for how to evict a tenant follows these steps:

  1. Ensure you have appropriate grounds for an eviction
  2. Serve an official written eviction notice to the tenant
  3. Serve a summons and complaint if the tenant fails to comply
  4. Attend a court hearing and judgment
  5. Issuance of a writ of execution evicting the tenant
  6. Gaining possession of the property

So, as you can see, the process can take some time, anywhere from a month to two months or more from start to completion.

Grounds for Evicting a Tenant

The first step in an eviction is determining the basis for the removal. Pennsylvania requires a landlord to comply with notice requirements. In addition, the notice must include the tenant’s violation prompting the eviction. And that violation must be a valid reason. There are plenty of factors in play currently due to the pandemic and it's fallout, so touching base with a real estate attorney would be prudent to get the latest information.

You have grounds to evict a tenant for any one of these violations:

Failure to Pay Rent

Unsurprisingly, the primary reason for an eviction notice is a tenant who fails to pay rent or does so habitually. In Pennsylvania, rent is late one day after due. A landlord can take steps to evict the tenant with a 10-Day Notice to Quit, giving them ten days to settle unpaid rent. If the tenant fails to pay after the notice to quit, a landlord can continue filing an eviction action.

Violations of the Rental Agreement

Pennsylvania allows a landlord to evict a tenant for violating written lease terms. For example, the tenant may have a pet or roommate prohibited by the lease agreement. In this case, the landlord presents a 15-Day Notice to Quit for tenants residing at the property for one year or less.

For tenants residing at the property for greater than one year, the landlord presents a 30-Day Notice to Quit.

In either case, the tenant must move out of the property within that timeframe. Otherwise, the landlord can file an action to evict them.

Illegal Activities

Landlords can give tenants a 10-Day Notice to Quit for performing illegal activities on the property. For example, if a tenant creates, distributes, or uses controlled substances. Or if police seize drugs from the tenant’s rental unit.

Other examples include using the property for gambling or prostitution. Landlords can also evict tenants for becoming a chronic nuisance or substantially damaging the property. Keeping records of dates and times and any police reports is important to strengthen your case.

Independent of sufficient cause, a landlord must wait for the tenant to commit some violation. Otherwise, the only remedy is to wait for their lease to expire.

It’s critical to note that the Landlord and Tenant Act require that the notice to quit be served personally to the tenant. That being said, you can post the notice on the principal building or the lease premises. However, you cannot deliver the notice to quit by mail. This is important information for landlords that may live out of town and don't have easy access to the property in question.

While typically expected, notice to quit isn’t always required. Sometimes tenants waive receipt for a notice to quit in the lease agreement. Make sure your lease agreements are up-to-date and signed is extremely important.

What Happens if the Tenant Fails to Leave?

It's likely that a tenant may fail to comply despite receipt of a notice to quit. Don't panic. In that case, the landlord must file a recovery of possession of real property action in the Magisterial District Court of the count where the property resides. Although you can file the action yourself, a real estate attorney has the experience to do so properly to avoid delays in eviction.

The court serves the tenant the action and sets a hearing date between seven and 15 days after the complaint’s filing.

On the hearing date, the landlord must appear in person and present their case to the judge. The tenant can also submit their claim.

Tenants can assert any number of defenses during the eviction process:

  • The landlord's allegations were false
  • The breach of the lease wasn’t severe
  • The complaint wasn’t reasonable
  • Improper serving of the notice
  • The landlord failed to remedy a condition of the property such as leaks, mold, or another dangerous issue
  • The eviction violates the Fair Housing Act - this could entail discriminating on the basis of race, color, religious creed, ancestry, age, sex, pregnancy/childbirth, national origin, familial status, and disability

However, if the court rules in the landlord’s favor, tenants typically have ten days to appeal the judgment.

In addition to judgment for possession of the property, the judge can enter judgment for outstanding rent due, damage to the property, and lawsuit costs. The judge may also award the landlord attorneys’ fees if the lease agreement allows for their recovery.

Order for Possession

Fifteen days after the judge’s decision, the landlord can request that the court issue an order for possession. Within 48 hours from receipt, a constable or sheriff must serve the order to the tenant.

That order states that the tenant must vacate the property ten days after service (15 days for a non-residential tenant). If the tenant has not left after that timeframe, the constable may forcefully evict the tenant from the property. After the constable delivers possession of the property, the landlord has legal possession.

Even after the constable delivers possession of the property, additional issues may arise if the tenant has left their personal property at the residence. Further, a tenant could delay the eviction if they file an appeal of the court’s decision.

Self-Help Evictions

In some instances, landlords take measures into their own hands. For example, they may change the lock or shut off utilities. So here’s a word of advice if you’re a landlord considering this approach – don’t do it.

Most states frown on landlords forcing tenants from the property. You can only evict a tenant following a successful lawsuit. Even then, only a sheriff or constable can evict the tenant.

More importantly, the tenant can ask for an injunction prohibiting their removal during the court action. In addition, they can sue you for damages plus violations. Finally, the court can grant the tenant the right to stay on the property.

Need to Evict Someone?

Landlords are often unaware of the numerous legal requirements to evict a tenant. However, if a landlord doesn’t follow the correct procedures and provide the proper notices, it can lead to redoing steps in the process.

Missteps can form a basis for a tenant to file an appeal, further delaying the landlord’s recovery of possession. Even worse, they could lead to the tenant suing the landlord.

You can learn more about your rights by reading the Consumer Guide to Tenant and Landlord Rights. Published in June 2022, the guide covers legal requirements and best practices for renting a property.

Ultimately, a real estate attorney well-versed in landlord-tenant law can provide cost-effective assistance so that the process proceeds as smoothly as possible.

Our law firm has offices in Bucks County and Montgomery County, PA. The Best Lawyers in America recognized 16 of our attorneys for 2023. So, you can count on our firm to deliver experienced representation for any legal issue.

For more information about landlord-tenant law, contact Kevin Cornish at (610) 275-0700 or by email at

The information above is general: we recommend you consult an attorney regarding your circumstances. This information is not legal advice or a substitute for legal representation.

Merging Property Lots in PA: What Municipalities and Landowners Should Know

A series of recent cases in Pennsylvania are highlighting the impact an enduring statutory zoning mechanism is having on some unsuspecting landowners across the Commonwealth. The following information is meant to educate Pennsylvania landowners and municipalities on Merger Doctrine basics and provides several strategies meant to avoid unwanted complications the Merger Doctrine is likely to create.

Doctrine of Merger of Lots,” or “Merger Doctrine” as it is sometimes called, is a zoning principle, rooted in a preference for municipal efficiency and land conformity, that has emerged from a group of cases interpreting local merger ordinances. The Merger Doctrine can apply where adjacent, undersized lots are, or were at some point, owned by the same person who also may have intended to merge them. In certain municipalities, the nonconforming, undersized, adjacent lots may be deemed to have merged into a single, conforming lot when certain conditions are met…even without the consent of the property owner.

General Rule:

The Merger of Lots Doctrine generally applies in Pennsylvania when the following elements are satisfied:

  1. The local governing body has adopted a merger provision;
  2. Two or more lots adjacent (adjoining) are involved;
  3. At least one of the lots is nonconforming with respect to the dimensional requirements of the applicable zoning code (i.e., undersized lots);
  4. The lots are or were commonly owned after the local government adopted a merger provision;
  5. There is a physical manifestation upon the land of the owner’s intent to merge the lots into one dimensionally conforming lot, or there is a failure on part of the landowner to manifest a clear intent to keep the lots separate.

When all the foregoing items are met, a municipality may consider the lots in question to have merged seemingly spontaneously. However, courts have found that a landowner may oppose a local government’s claim of “automatic” lot merger by negating one of these elements.

Strategies To Prevent Automatic Lot Merger:

1) "Physically" Keep the Properties Separate via trees, shrubs, or fencing – In a 1991 case, the Commonwealth Court held that mere common ownership of adjoining lots does not automatically establish a physical merger of those lots unless the common owner manifested an intent to keep the lots separate and distinct. Then, in a 1998 decision, the Commonwealth Court held that to establish a physical merger, there must be evidence of some overt, unequivocal physical manifestation thereof.

Still, courts may still act unpredictably with an evolving area of law such as the law of merger. To make clear the intent not to merge, a property owner can use physical barriers to keep the adjoining lots separate and distinct, such as trees or a fence. Abstract legal attributes, such as whether the property owner purchased the lots at the same time or whether the properties have separate deeds and separate tax identification numbers, do not suffice.

2) Look For a Merger Provision in the Local Ordinance – Consult your local ordinance to determine whether a merger provision has been adopted. Pennsylvania courts have consistently described the Merger Doctrine as being fundamentally a “creature of statute or ordinance,” not of common law, that only applies where a municipality has legislated a merger clause into the local code (e.g., Loughran v. Valley View Developers, Inc., a 2017 case). There is no merger provision in the Pennsylvania Municipalities Planning Code (MPC), so the provision must be locally enacted.

3) Look To the Timeline And Determine Whether the Lots Were Commonly Owned When the Merger Provision was Adopted – understanding the timing of ownership and the phrasing of the merger provision (if any) may be the key to preventing an automatic lot merger.

4) Check the Zoning History and Avoid Seeking Zoning Relief For a Single Property If, In Fact, Relief is Required For Multiple Lots – Courts have found past treatment of potentially merged property, including zoning applications (whether approved or denied) that refer to multiple lots as a single property, to be evidence of the owner’s intent to merge. See, e.g., in DiCicco v. City of Philadelphia. Of course, this factor would work against a landowner seeking to prove properties have not merged.

Ultimately, a real estate attorney well-versed in the law of merger of lots can provide cost-effective assistance to avoid common pitfalls so that a resolution can be reached as smoothly as possible.

Our law firm has offices in Bucks County and Montgomery County, PA. The Best Lawyers in America recognized 16 of our attorneys for 2023. So, you can count on our firm to deliver experienced representation for any legal issue.

For more information about the Merger Doctrine, contact real estate attorney Sean Livesey at (610) 275-0700.

This information is not legal advice or a substitute for legal representation.

William F. Kerr, Jr. named the Best Lawyers® 2023 Real Estate Litigation Lawyer of the Year in Philadelphia

High Swartz LLP is pleased to announce that real estate attorney William F. Kerr, Jr. has been recognized as the Lawyer of the Year in the Philadelphia Metro region for 2023. Best Lawyers® selects only one attorney in each legal service to represent a city's region. Mr. Kerr represents land developers, property managers, and owners in real estate matters including real estate tax assessments and various transactions.

Although this is his first recognition as Lawyer of the Year, Bill has been included in editions of Best Lawyers® in America since 2018, in multiple categories including Municipal Law. Kerr serves as a Zoning Board Solicitor and special zoning, development, and real estate tax counsel to several southeastern Pennsylvania municipalities. He also provides outside counsel on real estate matters to the Philadelphia International Airport.

Of special importance to Mr. Kerr is his work as a member of Habitat for Humanity of Montgomery and Delaware Counties Board of Directors. Habitat has helped thousands of our region's families build, repair and improve their homes, while assisting them in becoming financially stable.

Additionally, Bill represents numerous Pennsylvania affordable housing developers in various aspects of the affordable housing development process. These include properties financed with Federal Low Income Housing Tax Credits. Bill has been commended for his work with an affordable housing industry group that successfully pursued an amendment to Pennsylvania’s assessment law as it affects affordable housing.

Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. Almost 108,000 industry leading lawyers are eligible to vote (from around the world), and we have received over 13 million evaluations on the legal abilities of other lawyers based on their specific practice areas around the world. For the 2023 Edition of The Best Lawyers in America©, 9.4 million votes were analyzed, which resulted in more than 67,000 leading lawyers being included in the new edition. Lawyers are not required or allowed to pay a fee to be listed; therefore inclusion in Best Lawyers is considered a singular honor.

Sean G. Livesey Joins High Swartz LLP's Real Estate Practice Group

The firm is pleased to announce the addition of Montgomery County real estate attorney Sean G. Livesey to its Norristown law office.

Sean primarily focuses his practice on real estate matters, civil, and commercial litigation. He also has experience in zoning and land development, municipal code enforcement, real estate sales, and leasing.

Previously, Sean was a partner in his family practice in Conshohocken, PA, where he advised Philadelphia area startup companies regarding property acquisitions, business structure, and real estate tax liability. Sean also consulted with Montgomery County businesses to analyze zoning and land development proposals.

"High Swartz's real estate practice group shares my passion for representing developers and property owners while improving our communities in Greater Philadelphia. Joining Montgomery County's oldest law firm is an honor and I'm excited to contribute."

Prior to his private practice work, Sean was an associate at a large Philadelphia law firm’s commercial group where his practice included business litigation, real estate, zoning and land use. He represented real estate developers in Philadelphia, Montgomery County, Bucks County, and Delaware County. Sean also represented landlords in complex, large-scale landlord/tenant disputes.

As an associate at a large law firm in Virginia in 2018, Sean represented the claims administrator for the NFL Concussion Settlement in negotiating agreements with health systems to incorporate professionals into a diagnosing physicians network. Within the scope of the agreements, former players could be diagnosed with such neurodegenerative diseases as CTE, dementia, ALS, and Parkinson's.

Sean earned his J.D. at the University of Richmond's T.C. Williams School of Law while also obtaining his MBA at Richmond's Robins School of Business. After graduating, he served as a Judicial Intern for the Honorable Thomas N. O'Neill. Jr., United States District Judge for the Eastern District of Pennsylvania.

Sean grew up in Montgomery County, PA and enjoys cheering on Philly sports teams with his German shepherd, Zoe, a rescue from Memphis, TN.

17 High Swartz Attorneys Named Main Line Today Top Lawyers for 2021

We are pleased to announce that 17 attorneys have been included in the 2021 Main Line Today Top Lawyers Around the Main Line and Western Suburbs List.

Main Line Today is a Southeastern Pennsylvania regional magazine focusing on the communities of the western suburbs of Philadelphia and surrounding Counties. The Best Lawyers of Chester County, Delaware County and Montgomery County are nominated through peer balloting then vetted through Main Line Today's editorial process.

2021 sees the addition of 3 High Swartz attorneys to the Top Lawyers list. New attorneys include family lawyers Chelsey A. Christiansen and Michael B. Prasad for Divorce and Family Law and Stephen M. Zaffuto for Real Estate Law. Congratulations to all winners!

Below is the full list of High Swartz Top Lawyers from Main Line Today in 2021.

  • Joel D. Rosen - Business Law
  • Kevin Cornish - Civil Litigation
  • Mark Fischer - Civil Litigation
  • Melissa Boyd - Divorce & Family
  • Mary Doherty - Divorce & Family
  • Elizabeth Early - Divorce & Family
  • Chelsey Christiansen - Divorce & Family
  • Michael Prasad - Divorce & Family
  • Thomas Rees - Employment Law
  • James B. Shrimp - Employment Law
  • David Brooman - Municipal Law
  • Gilbert High - Municipal Law
  • William Kerr - Municipal Law
  • Richard Sokorai - Personal Injury
  • Arn Heller - Real Estate Law
  • Stephen Zaffuto - Real Estate Law
  • Thomas Panzer - Workers’ Compensation

If you're looking for lawyers near you in Norristown, Doylestown, and the Greater Philadelphia area, get in touch with our law office. Our attorneys and lawyers are some of the best you'll find to handle all your legal concerns.

Tenants and Bankruptcy

Few events are more frustrating to a landlord than tenants and bankruptcy. The uncertainty of whether the tenant will pay outstanding rent, compensate for utilities and late fees, and leave the property can be infuriating.

Originally acquired as a source of revenue generation, the property now serves as free housing for a delinquent tenant. Despite the seemingly helpless outcome of a bankruptcy filing, a landlord should know there are still options on regaining possession of his property, as well as receiving some payments, even when a tenant declares bankruptcy.

What Happens When a Tenant Declares Bankruptcy?

The bankruptcy begins when the tenant files a Petition in the Bankruptcy Court. Upon the filing of a Petition, any legal proceeding between the landlord and tenant immediately freezes. This abrupt halting of the landlord-tenant dispute, known as the automatic stay, remains in place until either the bankruptcy court permits for it to resume or the bankruptcy proceeding completes.

Even if the landlord has already won a lawsuit, obtained a judgment for possession to reclaim his property, and has coordinated with a local constable to evict a tenant, the automatic stay proibits any further action. The tenant gets to stay until one of the two conditions above occurs.

While the automatic stay remains in place, the landlord should consider his options in conjunction with a real estate attorney. The petition will specify what type, or Chapter, of bankruptcy the tenant has filed. A landlord's options depend on the type of bankruptcy the tenant has filed. In nearly all cases, a residential tenant will file in either Chapter 7 or Chapter 13 bankruptcy.

Tenants and Bankruptcy: Chapter 7

In Chapter 7 bankruptcy, the tenant surrenders his assets to a trustee. The trustee determines which of the tenant's creditors gets paid from those tenant's assets. The trustee generally liquidates the assets and ascertains the compensation each creditor receives.

The trustee pays creditors with secured claims with proceeds from collateral and then pays unsecured claims. As obligations to the landlord under a lease are usually unsecured, landlords typically fail to receive any payment of outstanding rent, late fees, or utilities when a tenant enters Chapter 7 bankruptcy.

The landlord may still get paid, however, if the tenant assumes the lease in bankruptcy. Under the Bankruptcy Code, the tenant must, within 60 days of filing his petition in Chapter 7, indicate whether he intends to either assume or reject the lease.

If the tenant agrees to the lease, he must maintain current rent payments and provide adequate assurance that he will pay all outstanding monies to the landlord within a reasonable amount of time. The tenant, in turn, can stay in the property while he pays the landlord under the terms of the lease.
Should the tenant fail to make such payments or provide the needed assurances, the landlord may file a motion with the Bankruptcy Court for relief from the automatic stay. A real estate lawyer can help you determine when, and if, to file a motion.

If the Bankruptcy Court grants the motion, the automatic stay terminates, and the landlord may return to state court to remove the tenant from the property.

If the tenant rejects the lease, he is no longer obligated to perform under its terms, such as paying rent. The landlord may try to obtain relief of the automatic stay from the Bankruptcy Court if the tenant refuses to vacate the property. After filing the petition, the Bankruptcy Code provides that the tenant rejects the lease if he does not assume it within 60 days.

Tenants and Bankruptcy: Chapter 13

With a Chapter 13 Bankruptcy, the tenant-debtor attempts to restructure his debt and pay his creditors based on a payment plan. This payment plan, which the Bankruptcy Court must approve (or confirm), should include the tenant's proposal on paying the landlord any outstanding rent and costs.

Unsecured creditors, like a landlord, may even receive payment. Unlike a Chapter 7 case, the debtor maintains control over his assets instead of having the trustee liquidate them.

In Chapter 13, the tenant has until the time the Bankruptcy Court judge confirms the payment plan, rather than the 60-day deadline in a Chapter 7 proceeding, to either assume or reject the lease. If the tenant drags his feet and fails to meet his lease obligations while the plan confirmation remains pending, the landlord may ask the Court to confirm the plan sooner or seek relief from the automatic stay.

A tenant may propose to pay the landlord only a fraction of the agreed-upon rent spread over a series of several months while maintaining possession of the property. The landlord, however, may seek relief from the automatic stay to re-obtain the property and seek monetary damages in state court. In the event you would like to seek relief, it’s best to consult with a real estate attorney near you.

Tenants and Bankruptcy: Chapter 11

While individual tenants typically enter bankruptcy under Chapter 7 and 13, some may file under Chapter 11. Typically, business entities file under Chapter 11. In Chapter 11, the tenant-debtor will file a restructuring plan and follow the same deadlines to assume or reject the lease as in a Chapter 13 case.

Like Chapters 7 and 13, the tenant's failure to comply with a lease (such as timely paying rent) provides the landlord a basis to seek relief from the automatic stay. Commercial property tenants filing under Chapter 11 have different deadlines to file a plan of reorganization. They also have separate timelines for assuming or rejecting the lease.

Should I form an LLC for an Investment Property?

So you want to invest in real estate, possibly buying one or more investment properties, but are not certain if you should buy them in your own name, as husband and wife or through some form of legal entity. The decisions you make now regarding the purchasing of the real estate could save you time and money in the future. That's why is pays to speak with a real estate attorney near you.

Should I buy rental properties in my own name or as a corporation?

There are various forms of entity to choose from, sole proprietorship, general partnership, limited partnership, limited liability company (real estate LLC) or corporation (C-corp or S-corp). Initially, it is best not to own investment real estate in your own name or a general partnership. In both cases, the individual owner and each general partner will be personally liable for debts/liabilities arising out of the real estate holding.

It is also preferable, in Pennsylvania, not to hold title in the name of a corporation as selling it triggers additional tax liability and the need for tax clearance certificates, which can delay closing on the sale.

LP or LLC? Which entity is best to purchase a rental property?

Eliminating individual ownership and general partnership essentially leaves you with either an LLC or a limited partnership. An LLC is cheaper and easier to set up and provides the same level of liability protection as a limited partnership as well as the same pass-through tax benefits to the members of the LLC.

A limited partnership requires the creation of a general partner, typically a corporate entity or limited liability company, which remains liable for the debts and liabilities of the limited partnership. The limited partners are shielded from liability. But that necessitates the creation of a limited partnership and a general partner. A limited liability company does the same work, with half the effort.

A real estate attorney can help you decide which is best for you.

Can I transfer the rental property title to the entity after it’s been purchased?

As a preliminary matter, whatever decision you make regarding the title to the property, make your final decision before buying the property. You don’t want to buy it as an individual and then after acquiring it transfer it to an entity you create. Such a scenario can create a double payment of real estate transfer tax, which can be significant depending on where you live. Thirty-eight states, including Pennsylvania, have taxes that are paid for transferring title to real estate.

In Pennsylvania, if you buy property in your own name (and pay the transfer tax on that acquisition) and then transfer it to a company you set up to hold title to the real estate, you have to pay transfer tax a second time. To avoid that, simply choose a form of ownership and stick to it. Check out our past articles on county-specific real estate transfer tax for Philadelphia and Montgomery County, PA.

In summary, many real estate companies take the form of real estate LLC for the reasons noted above. If you need assistance in forming an LLC for an investment property, talk to one of our real estate attorneys. Our law firm serves Bucks and Montgomery counties. Call today: 610.275.0700.

What Can Landlords Collect During the Eviction Moratorium, and What Can They Obtain After it Expires?

Landlords are eager to collect unpaid rent and repossess their property, but with the CDC’s eviction moratorium in place, what can landlords collect, and when?

In May, Pennsylvania Governor Tom Wolf entered an executive order preventing owners of residential properties from evicting their tenants for the tenants’ failure to timely pay their rent. Though renters were never permitted to permanently withhold rent payments, the executive order also permitted renters to delay making month-to-month payments while they navigated the COVID-19 pandemic. Governor Wolf extended the provisions originally set forth in the executive order through July 10, and again through August 31.

However, landlords in Pennsylvania could not resume eviction efforts even after Governor Wolf’s executive order expired on August 31. On September 4, the Center for Disease Control (CDC) entered its own order under Section 361 of the Public Health Service Act which placed a nationwide eviction moratorium on residential tenants effective when tenants submit to their landlords a document known as a “CDC Declaration.” The CDC’s order, which aims to prevent the further spread of COVID-19, will not expire until December 31, 2020.

With the prohibition on evictions lasting throughout the calendar year, landlords are undoubtedly anxious to reclaim possession of their rental properties. And though previously unable to collect owed money due to the Pennsylvania moratorium eviction, many landlords are eager to reclaim unpaid rent needed to pay the mortgages, taxes, and utilities on those rental properties.

So what is a landlord entitled to recover once the eviction moratorium expires?

Landlords can actually seek out monetary judgments at this time—the CDC’s order prohibits landlords from evicting tenants throughout December 31. Both Governor Wolf’s executive Order and the CDC’s order do not eliminate the tenant’s obligation to pay rent (though the Pennsylvania moratorium eviction permitted tenants to delay payments). That said, landlords can collect any monthly payments the tenant agreed to make in the lease, including all back rents and (if applicable) utilities. The CDC eviction moratorium merely prohibits landlords from repossessing their property.

What happens if the tenant cannot pay rent after the eviction moratorium expires?

If the tenant cannot pay his rent, but is still bound to several months’ of rent payments, a prudent landlord should inquire what payment the tenant can make. Landlords and tenants are always free to renegotiate the terms of the lease. Agreements to stagger payments of outstanding debts, such as a structured payment plan, can be viable alternatives to litigation. If litigation ensues, it's best to talk with a real estate lawyer for advice. And, in some cases, agreeing to release a tenant from part or all his lease obligations can be mutually beneficial: the tenant avoids increasing debt from unpaid rent, and the landlord can re-let his property to paying tenants.

What happens if a landlord and a tenant cannot agree on renegotiation of payment?

Under these circumstances, landlords should begin eviction proceedings and would be wise to see the assistance of a real estate attorney.

Not all situations, however, can be resolved. Again, many landlords have gone several months without receiving rent income, and may have no choice but to move on from tenants incapable of meeting their lease commitments. Under these circumstances, landlords should begin eviction proceedings and would be wise to see the assistance of a landlord-tenant attorney. Again, landlords should be mindful that they cannot evict tenants throughout December 31 if the tenant has submitted a CDC Declaration.

What is needed to start the process of tenant eviction?

The first step in an eviction proceeding is the issuance of a “Notice to Quit” letter. The Notice to Quit acts as a formal notification from the landlord to the tenant indicating the landlord’s intent to remove the tenant from the property.

How many days in advance must a Notice to Quit letter be given before eviction?

If the eviction is based on the tenant’s non-payment of rent, the Notice to Quit letter must give the tenant 10 days notice of the eviction. However, a tenant can waive his right to be served with a Notice to Quit, and such a waiver is often contained within the lease.

Can a landlord change the locks or otherwise engage in “self-help” on a tenant who hasn’t paid rent?

Landlords should also know that they cannot engage in self-help to carry out an eviction. This has been the law before the COVID-19 pandemic began, and will continue whether or not the eviction moratorium extends throughout 2021. In other words, in the absence of a court order, landlords cannot change the locks on their property to coerce delinquent tenants to leave, nor can they hire a locksmith to do so. Rather, if the tenant remains in possession of the property after the period detailed in the Notice to Quit, a landlord must obtain an eviction judgment from the relevant court.

How does a landlord get an eviction judgement in Pennsylvania?

Typically, to get that eviction judgment in Pennsylvania, the landlord must file a Complaint with the Magisterial District Court that lies in the same jurisdiction where the rental property is located. That Complaint should request that the Magisterial District Court Judge enter an order for possession in the landlord’s favor as well as a monetary judgment against the tenant for all back rent and court costs. In addition to possession and back rent, the landlord can also request judgment for any new rent that will become due at the time of the hearing, and if the lease permits it, unpaid utilities and attorneys’ fees.

The Court will then schedule a hearing at some later date, at which time the landlord (or the landlord’s attorney) will argue before a Magisterial District Court Judge as to why he is entitled to the relief demanded in the Complaint.

However, the Magisterial District Court will only hear a case when a landlord demands less than $12,000.00 in damages. In light of the protracted eviction moratorium—which will have lasted over eight months by the time the CDC’s order expires on December 31—it is not uncommon for a landlord to claim substantially more than $12,000.00 in back rent, attorneys’ fees, outstanding utility payments, and other potential damages. In this case, the landlord cannot file a Complaint with the Magisterial District Court and instead must look to the local Court of Common Pleas for relief. Cases heard before the Court of Common Pleas can take several months to litigate—much longer than those matters heard in the Magisterial District Court level. That said, a landlord owed a significant balance but more interested in obtaining possession may take advantage of the expedited litigation provided by the Magisterial District Court and agree to cap monetary damages at $12,000.00.

Can a tenant appeal an eviction?

Even if a judge grants an order for possession and other relief in the landlord’s favor, the landlord must wait 10 days before he can file the order for possession. During this 10 day period, the tenant can appeal the judge’s decision. If 10 days pass with no appeal, the landlord can then file and serve the order for possession, but a sheriff or constable will not initiate the eviction until another 10 days after service of the order for possession has passed. During this period, which can last several weeks, if the tenant can come up with enough money to satisfy the monetary judgment and the landlord’s costs in obtaining the order for possession before the constable or sheriff can initiate the eviction, then the tenant may continue to posses the property. (This benefit to the tenant, known as the right to “pay and stay,” is available only when the tenant faces eviction for non-payment of rent.)

Can a landlord evict a tenant for other reasons during the pandemic?

The above information outlines the landlord’s options due to a tenant’s non-payment of rent. The CDC’s order does not prevent landlords from commencing eviction proceedings for other reasons, such as when a tenant engages in criminal activity, destroys property, or otherwise violates provisions in the lease or building code. Under these circumstances, there may be different notice requirements that the landlord must adhere to prior to evicting, and the timeframes set forth in a Notice to Quit are different than in a non-payment of rent matter.

What, exactly, a landlord may recover depends on what he and the tenant agreed to in the lease. An aggrieved landlord should contact a landlord-tenant attorney to review the lease and get a better understanding of what he is entitled to after the eviction moratorium ends.

High Swartz Merges with the Law Offices of Glen-David Schwarzschild, LLC of New Jersey

We are pleased to announce the firm's merger with the Law Offices of Glen-David Schwarzschild, LLC. Glen is a skilled Real Estate attorney and will continue to practice out of the new High Swartz office in Cherry Hill, New Jersey.

Mr. Schwarzschild has an active general commercial law practice, consisting of both transactional and commercial litigation matters. His practice concentrates in the areas of real estate tax appeals, real estate, land use, small business representation, commercial litigation, commercial transactions, and related matters.

Practicing law since 1985, Glen brings to High Swartz an established real estate tax appeal practice both in New Jersey and Pennsylvania. He has successfully represented local, regional and national corporate property owners and national property tax consulting firms, including Fortune 500 companies, national real estate investment trusts, and regional and national property management companies.

“High Swartz reputation in the legal community and its ability to provide me with resources and support will allow me to grow my law practice, and maintain and develop relationships with my current and prospective clients.”, says Mr. Schwarzschild.

Glen earned a Bachelor of Science degree in Accounting with a minor in Business Administration from the University of Delaware in 1979. He obtained his Juris Doctor from Rutgers-Camden School of Law in 1985. He is admitted to practice in federal and state court in New Jersey and in Pennsylvania, and before the United States Supreme Court. Outside of the office, Mr. Schwarzschild looks forward to mentoring business students at the University of Delaware in the Fall semester.

The merger of Mr. Schwarzschild’s practice allows High Swartz to establish a presence in the state of New Jersey. While a number of attorneys at High Swartz are licensed to practice in the state, this will be its first office outside of southeastern Pennsylvania.